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Certified Residential Appraiser study materials
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Certified Residential Appraiser practice questions

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Question 1Valuation and Analysis (valuation process, scope of work, data selection and analysis)

For appraisal purposes, market value is best described as which of the following?

  1. The highest price a specially motivated buyer would pay
  2. The replacement cost of the improvements plus site value
  3. The most probable price in an open, competitive market Correct answer.
  4. The price recorded in the most recent transaction

Explanation

Market value is an opinion of the most probable price a property should bring in a competitive and open market under all conditions requisite to a fair sale, with buyer and seller acting prudently and knowledgeably and price unaffected by undue stimulus. It is neither a cost figure, a historical price, nor the price a uniquely motivated buyer might pay.

Question 2Valuation and Analysis (valuation process, scope of work, data selection and analysis)

Who is responsible for determining the scope of work in an appraisal assignment?

  1. The state appraisal board, which sets a fixed scope for each property type
  2. The lender's underwriter, who dictates the minimum research required
  3. The client, since the client pays for the report
  4. The appraiser, based on intended use, user expectations, and assignment conditions Correct answer.

Explanation

The Scope of Work Rule places responsibility on the appraiser to determine the extent of research and analysis needed, considering the client's intended use, the expectations of intended users, the property characteristics, and the assignment conditions. The appraiser must be able to support the scope as sufficient to produce credible results.

Question 3Valuation and Analysis (valuation process, scope of work, data selection and analysis)

Data describing national economic trends, regional population shifts, and neighborhood price patterns are best classified as which of the following?

  1. General data Correct answer.
  2. Subject data
  3. Specific data
  4. Comparable data

Explanation

General data describe the environment in which the property competes, including national and regional economic trends, population and employment patterns, and neighborhood market conditions. Specific data relate to the subject property and to the comparables used to value it.

Question 4Valuation and Analysis (valuation process, scope of work, data selection and analysis)

An appraiser obtains the price and terms of a transaction directly from the buyer and the selling broker. These sources are:

  1. General data, because they describe market activity
  2. Primary sources, from parties to the transaction Correct answer.
  3. Secondary sources, because they are not recorded documents
  4. Secondary sources, because they are oral rather than written

Explanation

A primary data source is one the appraiser uses directly, such as a party to the transaction, an inspector, or personal observation. Recorded deeds, MLS compilations, and published reports are secondary sources because the information has passed through another party.

Question 5Valuation and Analysis (valuation process, scope of work, data selection and analysis)

A neighborhood has ten recent sales, and one sale closed at a price far above all the others. Which measure is least influenced by that single sale?

  1. Range
  2. Median Correct answer.
  3. Mean
  4. Standard deviation

Explanation

The median is the middle value of an ordered set, so one extreme sale shifts it only slightly. The mean uses every value and is pulled toward the outlier, while range and standard deviation measure dispersion rather than central tendency.

Question 6Valuation and Analysis (valuation process, scope of work, data selection and analysis)

An appraisal is signed March 15 and states an effective date of February 1. The value opinion applies to which date?

  1. Whichever date the client specifies in the engagement letter
  2. February 1, the effective date of the opinion Correct answer.
  3. The date the property was last inspected
  4. March 15, the date the report was signed

Explanation

The effective date is the date to which the appraiser's opinion of value applies, while the report date is when the report is signed and transmitted. When the two differ, the analysis must reflect market conditions as of the effective date.

Question 7Valuation and Analysis (valuation process, scope of work, data selection and analysis)

The intended user of an appraisal is best described as which of the following?

  1. The mortgage broker who ordered the appraisal on the lender's behalf
  2. The parties the appraiser identifies as entitled to rely on it Correct answer.
  3. The person who physically receives the report
  4. Any party who might later obtain and rely on the report

Explanation

Intended users are the parties the appraiser identifies, in the report, as entitled to rely on the appraisal, and they are tied to the intended use of the assignment. Others who happen to receive the report do not thereby become intended users.

Question 8Valuation and Analysis (valuation process, scope of work, data selection and analysis)

Which test of highest and best use eliminates uses prohibited by zoning or deed restrictions?

  1. Financially feasible
  2. Maximally productive
  3. Physically possible
  4. Legally permissible Correct answer.

Explanation

The four tests are applied in sequence: legally permissible, physically possible, financially feasible, and maximally productive. Zoning, deed restrictions, and other public and private controls are considered at the legally permissible stage.

Question 9Valuation and Analysis (valuation process, scope of work, data selection and analysis)

How does exposure time differ from marketing time in an appraisal?

  1. It applies only to commercial properties listed on a multiple listing service
  2. It is retrospective, referring to the period before the effective date Correct answer.
  3. It is the same concept and the two terms are used interchangeably
  4. It is prospective, measured from the date of the report forward

Explanation

Exposure time is the retrospective period a property would have been offered on the open market before the effective date of the value opinion, at the concluded terms. Marketing time is prospective, estimated from the date of the appraisal forward.

Question 10Valuation and Analysis (valuation process, scope of work, data selection and analysis)

An appraiser values a parcel on the premise that a pending zoning variance has already been granted, although it has not. The report must disclose this premise as which of the following?

  1. An extraordinary assumption
  2. A jurisdictional exception
  3. An assumption of market value
  4. A hypothetical condition Correct answer.

Explanation

A hypothetical condition is a premise contrary to what the appraiser knows to be true, such as treating an ungranted variance as though it existed. It may be used only when necessary for the assignment and must be clearly disclosed.

Question 11Valuation and Analysis (valuation process, scope of work, data selection and analysis)

An owner tells the appraiser that the well and septic systems are in working order, but the appraiser cannot verify this. The appraiser should disclose the reliance on the owner's statement as which of the following?

  1. An extraordinary assumption Correct answer.
  2. A scope of work limitation requiring a new assignment
  3. A jurisdictional exception
  4. A hypothetical condition

Explanation

An extraordinary assumption accepts as true a matter that is uncertain and that, if found false, would alter the appraiser's opinion or conclusions. The appraiser must disclose the assumption and its effect if the premise proves incorrect.

Question 12Valuation and Analysis (valuation process, scope of work, data selection and analysis)

In the sales comparison approach, adjustments to comparable sales are applied in which sequence?

  1. Property rights, then financing, then physical characteristics, then conditions of sale
  2. Market conditions, then physical characteristics, then conditions of sale, then property rights
  3. Physical characteristics, then conditions of sale, then property rights, then market conditions
  4. Transactional adjustments first, then property adjustments Correct answer.

Explanation

The elements of comparison are applied in a logical order: transactional elements such as property rights, financing, conditions of sale, expenditures after purchase, and market conditions are handled first, followed by property elements such as location, age, and physical features. This sequence prevents double counting.

Question 13Valuation and Analysis (valuation process, scope of work, data selection and analysis)

Comparable properties in a market vary widely in size, and buyers and sellers there think in terms of price per square foot. The appraiser should:

  1. Use price per square foot as the unit of comparison Correct answer.
  2. Compare total sale prices without any size adjustment
  3. Always use price per room regardless of market behavior
  4. Use the cost approach instead of the sales comparison approach

Explanation

The unit of comparison should reflect how participants in that market actually price property. Where size drives price, price per square foot is the appropriate unit, and adjustments are applied to the resulting unit prices.

Question 14Valuation and Analysis (valuation process, scope of work, data selection and analysis)

Two nearly identical houses sold recently; one has a swimming pool and sold for $40,000 more than the one without a pool. The appraiser is applying which technique?

  1. Regression analysis
  2. Paired sales analysis Correct answer.
  3. Capitalization
  4. Trend analysis

Explanation

Paired sales analysis isolates the effect of a single difference by comparing two otherwise similar properties sold close in time under similar conditions. The price difference is attributed to the one distinguishing feature.

Question 15Valuation and Analysis (valuation process, scope of work, data selection and analysis)

The same house sold 14 months ago for $300,000 and sold again last month for $330,000. What is the indicated monthly rate of change?

  1. 10.0 percent per month
  2. 0.30 percent per month
  3. 0.10 percent per month
  4. 0.71 percent per month Correct answer.

Explanation

The price rose $30,000 on a $300,000 base, a 10 percent increase over 14 months. Dividing 10 percent by 14 months indicates approximately 0.71 percent per month.

Question 16Valuation and Analysis (valuation process, scope of work, data selection and analysis)

Before relying on a comparable sale, an appraiser should verify which of the following?

  1. That the price, terms, and arm's-length nature are accurate Correct answer.
  2. That the property was listed on an MLS
  3. That the buyer used a licensed real estate agent
  4. That the seller realized a profit on the transaction

Explanation

Verification confirms that the reported price and terms are accurate and that the transaction was arm's length, so the sale reflects market behavior. This typically involves confirming details with a party to the transaction and checking public records.

Question 17Valuation and Analysis (valuation process, scope of work, data selection and analysis)

Which situation most clearly indicates a transaction may not be arm's length?

  1. A sale between family members well below the listing price Correct answer.
  2. A sale where the buyer paid slightly more than the list price
  3. A sale financed with a conventional mortgage at market rates
  4. A sale that closed 45 days after the listing date

Explanation

Sales between family members, estates, or parties under duress often reflect motivations other than market forces, and the price may not represent market value. Market-rate financing, typical marketing periods, and competitive bidding are all consistent with arm's-length sales.

Question 18Valuation and Analysis (valuation process, scope of work, data selection and analysis)

A proposed use passes the legally permissible and physically possible tests but produces no positive net return to the land. The use fails which test?

  1. Physically possible
  2. Financially feasible Correct answer.
  3. Legally permissible
  4. Maximally productive

Explanation

The financially feasible test asks whether a use produces a positive net return to the land after all costs, including the required entrepreneurial profit. A use that returns nothing to the land fails this test and is eliminated before the maximally productive test is applied.

Question 19Valuation and Analysis (valuation process, scope of work, data selection and analysis)

Two sets of comparable sales have the same mean price, but set A has a standard deviation of $10,000 and set B has $25,000. Which statement is correct?

  1. Coefficient of variation cannot be computed without the median
  2. Set B has the lower coefficient of variation and is more reliable
  3. Set A has the lower coefficient of variation and is more reliable Correct answer.
  4. Both sets have identical dispersion because the means are equal

Explanation

Coefficient of variation expresses the standard deviation as a percentage of the mean, so with equal means the set with the smaller standard deviation has the lower coefficient of variation and tighter clustering. Greater dispersion usually indicates less consistent sales that require more careful weighting.

Question 20Valuation and Analysis (valuation process, scope of work, data selection and analysis)

Under the Scope of Work Rule, an appraiser's scope decisions must be which of the following?

  1. Limited to what the client is willing to pay for
  2. Sufficient to produce credible results and disclosed in the report Correct answer.
  3. Approved in advance by the state appraisal board
  4. Identical to those used in any prior appraisal of the same property

Explanation

The Scope of Work Rule requires the appraiser to determine an appropriate scope and to disclose it in the report, and the scope must be sufficient for credible assignment results. Scope decisions are not governed by fee, by client preference alone, or by a board-approved fixed list.

Question 21Valuation and Analysis (valuation process, scope of work, data selection and analysis)

An appraiser is engaged to appraise a standard tract home for a lender's refinance. Comparable sales are abundant. The appraiser performs an exterior inspection only, uses MLS data, and omits the cost approach. Is this scope acceptable?

  1. No, a complete interior inspection and all three approaches are always required
  2. Yes, because scope decisions are entirely at the client's discretion
  3. No, the cost approach is mandatory for all federally related transactions
  4. Yes, if the scope is disclosed and the resulting opinion is credible Correct answer.

Explanation

Scope of work is the appraiser's responsibility and varies with the assignment; for a standard tract home with abundant comparables, an exterior inspection and reliance on the sales comparison approach can be adequate. The scope must be disclosed and the results credible for the intended use, and any additional client requirements must still be met.

Question 22Valuation and Analysis (valuation process, scope of work, data selection and analysis)

A comparable sold for $420,000 and the seller paid $15,000 of the buyer's closing costs, a concession that is not typical of the market. To compare this sale with the subject, the appraiser should:

  1. Make no adjustment, because the seller paid the concession
  2. Reject the sale as non-arm's length and exclude it
  3. Reduce the comparable's price by $15,000 to a cash equivalent Correct answer.
  4. Adjust the comparable upward by $15,000 for the concession

Explanation

A seller concession that is not typical of the market means the contract price overstates the cash-equivalent price. The comparable is converted to its cash-equivalent amount, reduced by the concession, before further comparison with the subject.

Question 23Valuation and Analysis (valuation process, scope of work, data selection and analysis)

A site is improved with an older but sound house. Land value alone exceeds the value of the property as improved, and demolition costs are less than that difference. What is the highest and best use as improved?

  1. Continue the existing use because it is legally conforming
  2. Demolish the improvements and redevelop the site Correct answer.
  3. Value the property by the cost approach only
  4. Expand the existing structure to raise its contribution

Explanation

Highest and best use as improved compares continuation of the existing use with demolition and redevelopment. When land value exceeds value as improved by more than the cost to demolish, the correct conclusion is to raze the improvements and redevelop.

Question 24Valuation and Analysis (valuation process, scope of work, data selection and analysis)

Paired sales indicate a 6 percent annual increase in prices, while a repeat-sales study of the same neighborhood indicates 2 percent. The most defensible response is to:

  1. Apply the lower rate because repeat sales are more reliable
  2. Weigh each method's reliability and support the rate chosen Correct answer.
  3. Average the two indications and apply 4 percent
  4. Apply the higher rate because appreciation helps the borrower

Explanation

Conflicting indications require judgment rather than mechanical averaging or a fixed preference for one technique. The appraiser weighs sample size, comparability, and the reliability of each method and supports the selected rate in the report.

Question 25Valuation and Analysis (valuation process, scope of work, data selection and analysis)

For a single-family rental in a neighborhood of owner-occupants, the sales comparison approach indicates $415,000, the cost approach $440,000, and the income approach $400,000. In reconciliation the appraiser should:

  1. Select the highest indication because it best protects the lender
  2. Give equal weight to each approach regardless of property type
  3. Average the three indications to arrive at $418,000
  4. Weigh each indication by relevance and reliability for the property type Correct answer.

Explanation

Reconciliation is a process of analysis, not averaging, in which the appraiser weighs the relevance and reliability of each approach given the property type and market. For a single-family home in an owner-occupant neighborhood, the sales comparison approach is usually most persuasive.

Question 26Valuation and Analysis (valuation process, scope of work, data selection and analysis)

In the valuation process, identifying the problem includes which of the following?

  1. Defining the purpose and intended use of the assignment Correct answer.
  2. Reconciling the value indications from the approaches
  3. Estimating the reproduction cost of the improvements
  4. Calculating the absorption rate for new subdivisions

Explanation

Problem identification establishes the purpose, intended use, effective date, and property rights to be appraised. Cost estimation and reconciliation occur later in the valuation process.

Question 27Valuation and Analysis (valuation process, scope of work, data selection and analysis)

Which statement best describes market value?

  1. The total cost to replace the improvements today
  2. The price actually paid by the buyer in the most recent closed transaction
  3. The assessed value shown on the county tax roll
  4. The most probable price in a competitive and open market Correct answer.

Explanation

Market value is the most probable price in a competitive and open market under all conditions requisite to a fair sale. Actual price, replacement cost, and assessed value are different concepts.

Question 28Valuation and Analysis (valuation process, scope of work, data selection and analysis)

An appraiser is deciding whether to complete the cost approach for an older home. The decision should be based primarily on which consideration?

  1. Relevance and reliability to the intended use and users Correct answer.
  2. The lender's written checklist of required approaches
  3. The appraiser's customary practice on prior assignments
  4. The cost of developing the approach in time and fees

Explanation

Scope of work must be sufficient for the intended use and users, and an approach may be omitted when it is not relevant or reliable. Custom, a lender checklist, and development cost do not by themselves govern the decision.

Question 29Valuation and Analysis (valuation process, scope of work, data selection and analysis)

Which item is general data rather than specific data?

  1. Neighborhood unemployment and population growth trends Correct answer.
  2. The verified sale price of the most comparable closed sale
  3. The gross living area and condition of the subject property
  4. The subject property's lot size, bedroom count, and age

Explanation

General data describe broad forces such as employment and population trends that affect value. Subject and comparable details are specific data.

Question 30Valuation and Analysis (valuation process, scope of work, data selection and analysis)

An appraiser verifies the price and terms of a comparable sale with a party to the transaction. What is the primary purpose of this step?

  1. It eliminates any need for the appraiser to inspect the subject property
  2. It helps confirm the sale reflects market conditions and accurate data Correct answer.
  3. It guarantees that the comparable sale will require no adjustments whatsoever
  4. It sets the exposure time for the subject property

Explanation

Verification confirms the sale price, terms, and motivation so the appraiser can judge whether the transaction is usable and accurate. It does not guarantee zero adjustments or replace inspection.

Question 31Valuation and Analysis (valuation process, scope of work, data selection and analysis)

An extraordinary assumption is best described as which of the following?

  1. A published market statistic used to support an adjustment
  2. A condition the appraiser believes is true but cannot readily verify Correct answer.
  3. A statement that limits the appraiser's liability for errors
  4. A condition that is known to be contrary to fact and is used for analysis

Explanation

An extraordinary assumption is a condition the appraiser believes is true but cannot readily verify; if false, it could affect value. It must be disclosed.

Question 32Valuation and Analysis (valuation process, scope of work, data selection and analysis)

Which statement best distinguishes a hypothetical condition from an extraordinary assumption?

  1. A hypothetical condition assumes something contrary to known fact Correct answer.
  2. A hypothetical condition is used only for proposed construction
  3. An extraordinary assumption is always contrary to a known fact in the assignment
  4. Both terms describe assumptions that require no disclosure

Explanation

A hypothetical condition is contrary to known fact and is used for analysis, such as valuing a proposed improvement. An extraordinary assumption is uncertain but believed true.

Question 33Valuation and Analysis (valuation process, scope of work, data selection and analysis)

The sales comparison approach is most reliable under which circumstance?

  1. An active market with sufficient recent comparable sales Correct answer.
  2. A market where no recent sales of similar properties can be found
  3. A market where cost data are more reliable than sales
  4. A unique property with no close substitutes available

Explanation

The sales comparison approach works best when there are enough recent, similar sales to reflect buyer behavior. Unique properties or thin markets make it less reliable.

Question 34Valuation and Analysis (valuation process, scope of work, data selection and analysis)

Which unit of comparison is generally most appropriate for a four-unit apartment building?

  1. Price per acre of land area
  2. Price per front foot of street
  3. Price per square foot of gross living area
  4. Price per unit Correct answer.

Explanation

For a multi-unit property, buyers typically compare price per unit, so that unit best reflects market behavior. Per-acre, per-front-foot, and per-square-foot site units are less relevant.

Question 35Valuation and Analysis (valuation process, scope of work, data selection and analysis)

Which item is specific data?

  1. National trends in mortgage interest rates and credit availability
  2. Regional population growth forecasts and migration patterns
  3. The subject property's gross living area Correct answer.
  4. Local employment, income, and unemployment statistics

Explanation

Specific data concern the subject and comparable properties, such as gross living area. General data concern broad economic, social, and governmental trends.

Question 36Valuation and Analysis (valuation process, scope of work, data selection and analysis)

A comparable sale closed eight months ago, and market prices have risen since then. What adjustment is indicated?

  1. A sales concession adjustment for financing paid by the seller
  2. A market conditions adjustment for the time between sales Correct answer.
  3. A physical deterioration adjustment for the comparable's age
  4. A functional obsolescence adjustment for outdated fixtures

Explanation

When market conditions change between the comparable sale date and the effective date, a market conditions adjustment is appropriate. It accounts for price change, not physical or functional differences.

Question 37Valuation and Analysis (valuation process, scope of work, data selection and analysis)

Which source provides the best evidence for estimating exposure time?

  1. The lender's required delivery date for the appraisal
  2. Days on market for comparable properties that sold Correct answer.
  3. The subject's original construction date and permit history
  4. The appraiser's typical turnaround time for reports

Explanation

Exposure time is estimated from market evidence such as days on market for comparable properties. It is the period a property would have been offered before the effective date.

Question 38Valuation and Analysis (valuation process, scope of work, data selection and analysis)

A neighborhood has several unusually high sale prices that distort the average. Which measure best represents the typical sale price?

  1. The median sale price Correct answer.
  2. The arithmetic mean sale price
  3. The lowest sale price in the neighborhood
  4. The highest sale price in the neighborhood

Explanation

The median is less influenced by a few extreme values than the mean. It better represents the typical sale when the distribution is skewed by unusually high prices.

Question 39Valuation and Analysis (valuation process, scope of work, data selection and analysis)

Two neighborhoods have mean sale prices of $200,000 and $400,000. Which statistic best compares their relative price dispersion?

  1. Coefficient of variation Correct answer.
  2. Range between the highest and lowest sale prices
  3. Median sale price of each neighborhood
  4. Mode of the sale prices in each neighborhood

Explanation

The coefficient of variation expresses standard deviation as a percentage of the mean, allowing comparison of relative dispersion between markets with different price levels. Range, median, and mode do not adjust for scale.

Question 40Valuation and Analysis (valuation process, scope of work, data selection and analysis)

A comparable property sold through foreclosure under duress. How should the appraiser treat this sale?

  1. Reject it automatically because it was a foreclosure sale
  2. Use the sale without any adjustment because every closed sale is a market transaction
  3. Verify the sale and give it little weight unless the market reflects distress Correct answer.
  4. Use it as the primary comparable because the price is lower

Explanation

A foreclosure sale may not reflect typical market conditions, so the appraiser verifies terms and motivation. It can be used if the market reflects distress, but it is not automatically primary or rejected.

Question 41Valuation and Analysis (valuation process, scope of work, data selection and analysis)

When analyzing highest and best use as improved, the appraiser primarily considers which question?

  1. Whether the improvements meet current building codes
  2. Whether the existing improvements should be retained or demolished Correct answer.
  3. Whether the site can be subdivided into smaller parcels
  4. Whether the property's current use is legally permitted under current zoning

Explanation

As-improved analysis asks whether the existing improvements contribute value or whether demolition and redevelopment would be maximally productive. It considers retention versus removal, not just zoning or code compliance.

Question 42Valuation and Analysis (valuation process, scope of work, data selection and analysis)

A property has a net operating income of $36,000, and the market-derived capitalization rate is 9 percent. What is the indicated value?

  1. $400,000 Correct answer.
  2. $360,000
  3. $450,000
  4. $324,000

Explanation

Value equals net operating income divided by the capitalization rate: $36,000 divided by 0.09 equals $400,000. The cap rate converts a single year's income into an indication of value.

Question 43Valuation and Analysis (valuation process, scope of work, data selection and analysis)

A gross rent multiplier is calculated as which of the following?

  1. Sale price divided by monthly gross rent Correct answer.
  2. Net operating income divided by sale price
  3. Sale price divided by annual net operating income
  4. Monthly gross rent divided by sale price

Explanation

The gross rent multiplier is sale price divided by monthly gross rent. It is a quick income-related tool, not a capitalization rate formula.

Question 44Valuation and Analysis (valuation process, scope of work, data selection and analysis)

Which item is typically treated as a capital expenditure rather than an operating expense in income analysis?

  1. Landscaping the front yard
  2. Repairing a leaking faucet
  3. Replacing the roof Correct answer.
  4. Painting the interior walls

Explanation

Capital expenditures are items that extend the useful life or restore the property, such as roof replacement. Routine painting, minor repairs, and landscaping are typically operating expenses.

Question 45Valuation and Analysis (valuation process, scope of work, data selection and analysis)

An appraiser estimates vacancy and collection loss for a rental property based on which source?

  1. The subject's vacancy last month only
  2. The lender's required minimum vacancy
  3. The appraiser's personal investment portfolio
  4. Market data for similar rental properties Correct answer.

Explanation

Vacancy and collection loss should be supported by market data for similar properties, not by the subject's single-month experience or lender minimums. It reflects typical rental market conditions.

Question 46Valuation and Analysis (valuation process, scope of work, data selection and analysis)

An appraiser values a 20-unit apartment building in a market with high vacancy and declining rents. Which approach generally deserves the greatest weight?

  1. The allocation method
  2. The income approach Correct answer.
  3. The cost approach
  4. The sales comparison approach

Explanation

For an income-producing property, buyers are primarily influenced by expected income, so the income approach directly capitalizes net income. Sales comparison may support the conclusion, but income is most relevant when rental market conditions drive value.

Question 47Valuation and Analysis (valuation process, scope of work, data selection and analysis)

If an appraiser lacks the competency to complete a complex assignment, what does USPAP require?

  1. Ask the client to sign a waiver of the competency rule
  2. Use an extraordinary assumption to cover the missing expertise
  3. Disclose the lack of competency and take steps to complete or withdraw Correct answer.
  4. Proceed without any disclosure because the client selected the appraiser for the assignment

Explanation

USPAP competency requires the appraiser to have the knowledge and experience to complete the assignment competently. If not, the appraiser must disclose the deficiency and take steps to complete competently or withdraw.

Question 48Valuation and Analysis (valuation process, scope of work, data selection and analysis)

A market has an absorption rate of two months and rising sale prices. This market is best described as which of the following?

  1. A seller's market Correct answer.
  2. A market in decline
  3. A balanced market
  4. A buyer's market

Explanation

A low absorption rate means available inventory is sold quickly relative to supply. Two months of supply typically favors sellers and supports upward price pressure.

Question 49Valuation and Analysis (valuation process, scope of work, data selection and analysis)

The subject has three bedrooms, but county records show two. How should the appraiser handle this discrepancy?

  1. Average the two counts to avoid making an adjustment
  2. Verify the discrepancy and use the most reliable data Correct answer.
  3. Use the owner's statement because the owner knows the home
  4. Use the county record because public records are conclusive

Explanation

Public records can contain errors, and owner statements may also be inaccurate. The appraiser should verify both and rely on the most credible evidence, documenting any discrepancy.

Question 50Valuation and Analysis (valuation process, scope of work, data selection and analysis)

A property has a land value of $120,000, a reproduction cost new of $200,000, and accrued depreciation of $85,000. What is the value indicated by the cost approach?

  1. $235,000 Correct answer.
  2. $150,000
  3. $320,000
  4. $200,000

Explanation

Cost approach value equals land value plus reproduction or replacement cost new minus accrued depreciation. $120,000 plus $200,000 minus $85,000 equals $235,000.